Thursday, May 27, 2010

Presentation at the Turkey 2020 Conference


The transcript of my presentation at the Turkey 2020 conference, co-hosted by Turkey's Change Movement and the Foreign Policy Centre in Istanbul on 28 May.

***

I work at a political risk research and consulting company. We advise financial and corporate investors about the political and regulatory risks in our respective countries of coverage. Soon after joining the company, I realized that I would have to look at Turkey and its issues through the eyes of foreign investors. They do not want to know more than they think they need to know. So I appreciate this opportunity to look at Turkey not through foreign investors’ eyes, but through my own.


A couple of years ago there was discussion about whether Turkey would become more like Malaysia. To this question, Cem Yılmaz responded by asking whether Turkey would become the Netherlands. We should take this second question seriously.


Despite the improvements in macroeconomic stability and favorable global conditions, the economic growth rate started its downward trend in 2006. Moreover, the high growth rates experienced especially during the AKP’s first term in power were accompanied by high unemployment and a high current account deficit. The unemployment rate was high despite women’s low labour participation rate, and the millions of people (according to some estimates 9 million) working in the informal sector with no social security. Now it appears that we will eventually reach the same equilibrium with a higher unemployment rate as global liquidity improves.


A high current account deficit means that our exports are not competitive, and we need external funding to maintain growth. This is an unsustainable model, as capital inflows are often procyclical. In this regard, we share much in common with Southern European countries.


We need a more sustainable growth model, and we need to answer two questions to achieve that:


1) How can we increase domestic savings?

2) How can we produce better quality, more sophisticated products and services?


We should address the vicious circles in our economy. The first one has to do with the informal economy. Companies in the informal economy produce low value added products, they don’t earn much, and they don’t save and invest. They are also not regulated to ensure the safety of their work conditions and their products. Meanwhile, because the government does not collect taxes from the informal sector, the burden of taxes and social security contributions weigh on the formal sector. Instead of trying to broaden the tax base, tax investigators target the biggest taxpayers. Companies in Turkey have little incentive in operating and investing in the formal economy. Public finances also suffer, forcing the government to borrow extensively from domestic banks and limit public investment.


To move up the value chain, we also have to address our education system. The current system only breeds inequality. The majority of the public spending on education is concentrated on a minority of bright students. These students have a much greater chance of getting hired in the formal sector than all the rest. After receiving their university education in Turkey, many students choose to move and work abroad.


The period from 2002 to 2007 presented a good opportunity to tackle these structural problems, but the government did not take it. The prospects for meaningful reform for this year and 2011 do not look much brigter due to the electoral cycle – the referandum this year and general elections next year.


I would like to conclude my remarks with a final observation. The majority of economic research is produced by academics or by financial institutions. That’s why we see aggregates when we look at the research, we don’t see individuals. We lack a sense of imagination. We do not imagine what it feels like to be a woman who is forced to sit at home all day, taking care of the children or the elderly. We also do not imagine what it would be like to be a teenager, who is trapped in a second-class education. We might console ourselves by thinking that they did not have the potential to succeed anyway, or that they are in fact not that unhappy because they are not aware of what is out there and what they could accomplish. But we need people who can dream of being successful. We need to be able to dream of reaching the life standards in the Netherlands one day.


I really hope that social democracy in Turkey will be able to imagine. They will be able to imagine how difficult people’s lives are, and they will be able to imagine something better. Thank you.

Wednesday, May 26, 2010

Sleepwalking through life

Yesterday at work I was reading a paper, and I came across some familiar assertions. They were familiar, but in the current context and times, no longer relevant. I realized that the author of the paper had been sleepwalking through old ideas as he was writing it - he wasn't really present, he wasn't really thinking. Maybe his complacency had gotten the best of him - he was so sure of himself and his ideas that he had seized thinking. If you think you know something, there's no way to learn it. Then I remembered how I missed the Lille station and went all the way to Disneyland on Sunday. And I remembered Zadie Smith's essay.

I think some humility and caution (fear?) is in order when one is thinking, deciding, writing, living. That slows our pace... but maybe it's a price worth paying... not to miss the stations.

Sunday, May 23, 2010

Kezban'ın Eurostar'la imtihanı

Dört senelik Londra yaşantım boyunca ilk defa Eurostar'a bindim. Tam sekiz senedir doğru dürüst görmediğim lise arkadaşımı görmeye gidiyorum. (Artık eski arkadaşlarla buluşunca kullandığımız birimin "yıl" olması çok garip geliyor.) Kitabımı okuyorum güya ama içim uyuyor(muş). Pelin Batu dediyse vücudum attı herhalde. Duvarlarında Lille International yazdığı halde çok karanlık olduğu için istasyon olamayacağına karar verdiğim bir yerde durduk. Burası daha tüneldi mutlaka. (Londra metrosunda fazla seyahat etmenin sonuçları.) Beni parka çağıran bi arkadaşıma kinayeli kinayeli mesaj attım "şimdi Lille'e geldim" diye. Sonra tren hareket etti. Ben bi baktım tünelden çıkmakla kalmamışız, Fransa yamaçlarında ilerliyoruz. Çimenler dalgalanıyor dört bir yanda. Önde oturan aile gelmiş benim sırama oturmuş, benim sıramdakiler yok (artık nasıl sessiz kalkıp indilerse sinsi şeyler!).

Bu şaşkınlığım beni çok şaşırttı. Korkuttu da yani. Ben bu kafayla... Neyse kendimi yermeyeyim. (İnsan kendisi istemedikçe rezil olmazmış.) Bar vagonunda tren müdürünü buldum. (Evet burda tren müdürü var.) Adam bir sonraki istasyonun Disneyland olduğunu (trendeki bütün sinir bozucu veletlerin hedefi), bir saat sonra oraya varacağımızı söyledi, Disneyland'deki çalışma arkadaşlarına bana bedava bilet vermelerini rica eden Fransızca bir not yazdı. Telefonunu kullanabileceğimi söyledi. Disneyland istasyonundaki çok iyicil yaşlı görevli bana bedava bilet verdi. Fransız demiryollarının çok karizmatik treniyle (sessiz vagonda herkes çok sessizdi, yazı masalarında masa lambaları vardı!) Lille'e vasıl olabildim. Eurostar'a laf eden karşısında beni bulur bundan böyle. Yol boyunca bunun kaderin bi oyunu ya da bir işaret (belki yanlış trendesin demek isteniyor) olup olamayacağını düşündüm. Hiç biri değilmiş.

Lille'den aklımda şunlar kaldı: Hatırladığımdan da candan arkadaşım ve onun sevdiği, ama bırakmaktan gocunmadığı şehri. Tanıdıkların haberleri. Yemyeşil ağaçlı meydanlar. Dar arnavut kaldırımlı sokaklar, sokaklardaki şık kafeler, pastaneler, dükkanlar. Kepekli krep. Dünyanın en dar merdivenleri ve en geniş tuvaleti. İçinde modern resimler bulunan, bir yüzü modern katedral ve önündeki şarapçı. Katedrale çıkan yolda bi taşla futbol oynayan kardeşler. Katedralin karşısındaki şık kafe ve kaldırımdaki şık insanlar. Dünyanın (dışardan bakınca) en güzel müzesi. İspanyol tüccarların yaptırdığı borsanın avlusundaki sahaflar. (Evet metrolardaki Lille resimlerinde gösterilen yer burası). Sahaflardaki emlakçı. Gölgeli, yemyeşil park. Brüksel'e kadar giden kanal. Kanalın kaybolduğu yerdeki yeşil platform. Yeşil ördek ve kanal havası. Printemps. Yolun ortasında iki köpekle oturan çocuk. Eurostar'ın Lille'den geçmesi için ısrar eden zamanın Fransa başbakanı ve Lille belediye başkanı.

Eylül'de bit pazarı varmış...

Sunday, May 16, 2010

"What literature needs most to tell and investigate today are humanity's basic fears: the fear of being left outside, and the fear of counting for nothing, and the feelings of worthlessness that come with such fears; the collective humiliations, vulnerabilities, slights, grievances, sensitivities, and imagined insults, and the nationalist boasts and inflations that are their next of kind ... Whenever I am confronted by such sentiments, and by the irrational, overstated language in which they are usually expressed, I know they touch on a darkness inside me. We have often witnessed peoples, societies and nations outside the Western world – and I can identify with them easily – succumbing to fears that sometimes lead them to commit stupidities, all because of their fears of humiliation and their sensitivities. I also know that in the West – a world with which I can identify with the same ease – and peoples taking an excessive pride in their wealth, and in their having brought us the Renaissance, the Enlightenment, and Modernism, have, from time to time, succumbed to a self-satisfaction that is almost as stupid." Orhan Pamuk, from his Nobel lecture.

Four lions

Go watch this movie to see how Chris Morris looks like an ass, trying to expose the fanaticism, confusion and irrationality of a group of Islamist terrorists (surprise, surprise) without ever bothering to ask or explain why or how. I am not saying a sappy drama that made heroes of terrorists would have been good. But the other extreme isn't any better. The shallow jokes are not funny. The cast and the crew and the people in the audience who made a point of breaking into loud laughter may find themselves all cool and enlightened and hip, but they are obnoxious. The movie reminded me of the Danish cartoons, which served no purpose but to satisfy their creators.

A better use of your time would be to read this.

Sunday, May 09, 2010

Crisis in the Eurozone

I never thought our European Monetary Union courses at the LSE would become so relevant so quickly. My fascination with the unfolding events only matches the sheer amazement when Lehman collapsed in the autumn of 2008. Only now it is actually recognizable - because we studied all this with the aid of Paul DeGrauwe's Economics of the Monetary Union. We studied the asymmetric shocks and fiscal decentralization and the implicit bail-out guarantee. In theory, of course. This was all theoretically possible, but come on, how on earth would a Eurozone country actually come to the brink of default? The border between the thinkable and the unthinkable is moving out constantly.

Leaving aside Ireland for now, Greece, Spain, Italy and Portugal were asymmetrically affected by the global financial crisis due to the structural problems in their economies. Even as demand recovers, their exports will not be competitive in the world markets. The only way they can stabilize their bulging public debt is by running primary surpluses. They promise to do exactly that to calm down the markets - but if they keep to their word, they will face an even more severe recession. In fact, markets question the credibility of the Greek consolidation plan given the conditions of the EUR 110-billion loan package. Analysts argue that the restructuring of the Greek debt is inevitable once the balance sheets of the Eurozone banks exposed to Greek debt are strengthened.

The bailout aims to save the banks and the institutional investors, less so Greece. Greece will pay for the ordeal now. Creditors will pay, if they ever do, a few years down the line, when they are stronger to cope with it.

What makes this story (as with any story) interesting is the politics. What are the preferences of the policy-makers, and what will they be forced to do? Will the Eurozone eventually set up a fund to support states when they are hit by asymmetric shocks? Will the Eurozone issue union-wide bonds? Will a separate fund be established to bail out European banks? Will the ECB buy sovereign bonds to help out investors? The answers to all these questions hinge on the internal politics of large member states, and the inter-state negotiations in the Eurozone.

As these talks are underway, and they will surely take a long time, Southern European states will be expected to put their house in order. This will involve public spending cuts and tax hikes across the board, but these states will also have to undertake structural reforms to reduce costs. Reduce labour costs, that is. Make the labour market more flexible. Cut wages and pensions in public and private sectors.

But will they take the bitter medicine? And should they? As the footage of Greek demonstrations was shown on TV, one Greek woman insisted in the background: "We want to live, not survive." In the greater scheme of things, we might condemn those lazy Greeks. They will have to work harder, just like the Germans - and the Eastern Europeans, Indians and Chinese.

But nowadays new ideas are circulating. Not that they have any chances of becoming reality any time soon, but they challenge the way we are used to seeing things. Dani Rodrik's proposal to establish a more flexible system, which allows countries to "opt out", would potentially lead to more segmented financial and product markets. Martin Wolf also hinted at the possibility of inherent flaws in the system by asking why countries with large current account deficits always end up in crisis. In his new book the Enigma of Capital, David Harvey argues that the "surplus capital" should be put to better uses than roaming freely and violently around the world. More on that when I finish the book.

I don't have a conclusion here, so no use trying to come up with a fancy but empty sentence. To be continued.

Saturday, May 08, 2010

Akrep gibiymişim kardeşim

Yazdım ya yukarıya Eurozone yazısını, artık asıl konuya gelebilirim. Üstelik ismimi de kaldırdım blogdan, çünkü iş başvuruları yapıyorum. Böyle her şeyi bilmesin müstakbel patronum/kayınvalidem vb. (Cevdet Bey'in dediği gibi, hayatta iki amaç vardır, iyi bir iş ve iyi bir eş. Bir akrep burcu için ikisi de pek önemlidir.)

Çok sayıda internet sitesinin oy çokluğuyla aldığı karara göre yükselen burcum akrepmiş. (Biri bana karar almakla karar vermek arasındaki farkı açıklasın.) Tam doğum saatimi bilmediğimden hata marjı koydum, her şekilde akrep gibiyim. Yani nasıl benimsedim yeni burcumu, nasıl sevdim anlatamam. Resmen üç boyutlu hissettim kendimi. Hiç öyle görünmesem de (aşkolsun Başak!) gizemli, ketum, seksiymişim (tüm bunları görünmeyip olmak tabii ayrı bi başarı). Evet öyleymişim! Üstelik inatçıymışım, kıskançmışım, şüpheciymişim, hırslıymışım, olayları siyah-beyaz görürmüşüm falan feşmekan. Uyuz biriymişim yani. Masum değiliz hiç birimiz.

Hahayt. Bundan böyle düşünerek atın adımlarınızı, elbet bir gün mutluluktan yana alırız payımızı. Hayır İclal Aydın değilim.

Wednesday, May 05, 2010

Dürüst olmak gerekirse

Birisi derse dürüst olmak gerekirse
Anla ki seveceğin bir şey duymayacaksın
Ama diyen yine de diyeceğini diyecek

Bazen düşünüyorum
Benim bu bulup şaşırdıklarımı
Çoktan birileri düşünmüştü de
Sözünü etmeye gerek bile duymamıştı

Bazılarını ben de düşünmüştüm
Sözünü dahi etmiştim

Belki aramaya devam etsem sürekli
Seni bile şaşırtabilirim günün birinde
Ama bu ihtimali unutacağız ikimiz de

Senin sabrın yok
Benim cesaretim

Dürüst olmak gerekirse
(Ki bu girizgaha da hiç gerek yok aslında)
Ben bütün gün dolaşmak, okumak, yazmak
Akşamları da seni görmek isterdim.